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Salesforce also announced plans for layoffs on Wednesday.
Amazon is planning to cut more than 18,000 jobs as part of a reduction that began in late 2022, and is extending into the new year.
The number of layoffs, which was shared in a memo posted publicly by the company, represents additional eliminated positions beyond what was initially shared in 2022. In November, the reported total of the layoff was 10,000 positions, but Jassy wrote at the time that reviews were still ongoing.
On Wednesday, Jassy wrote that the review “has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years.”
“These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles,” Jassy wrote. “Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”
The layoffs will mostly affect Amazon Stores, which encompasses ecommerce and physical retail, as well as the division known as People Experience and Technology, which encompasses people ops and culture functions.
Jassy wrote that the layoffs will begin on January 18. The company had planned to communicate all of this following communication with employees, but news of the additional layoffs was leaked to the Wall Street Journal, prompting the official word to be delivered sooner.
The cuts come as Amazon continues to recalibrate following the COVID-19 pandemic. Prompted by a spike in ecommerce demand, the company massively expanded its logistics network and hired rapidly over 2020-21. But by April of 2022, the company said it had too much capacity in its network. Amazon has since engaged in belt-tightening, including making cuts to certain future-facing tech projects like home delivery robots and to its devices team. This week, Amazon also disclosed that it secured an $8 billion loan, to be used for general expenses this year.
The layoffs come after the company communicated uncertainty about its prospects heading into the recently-completed fourth quarter and the holiday shopping season. While Amazon last week said it had a record holiday shopping season and shared that 60% of items purchased were from third-party sellers, it has yet to release numbers showing overall results.
Amazon is not the only company that provides the tech infrastructure of ecommerce to make layoffs in recent months, as Meta, Shopify and Stripe have also let go of large numbers of employees. But Amazon's planned number of employees is now the highest so far of this wave.
On Wednesday, Salesforce, which provides ecommerce tools to brands and retailers through Commerce Cloud as part of a wider CRM business, said it would lay off 10% of its workforce. That’s about 8,000 employees, the New York Times reports.
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” CEO Marc Benioff wrote in a memo to employees.
The convergence of inflation, interest rates and consumer shifts back to pre-pandemic preferences for experiences and in-person shopping created a difficult environment for tech companies that saw the biggest rise during pandemic years that saw demand for goods and digital adoption explode like never before. Wednesday’s layoffs are a sign that the fallout will continue in 2023.
NRF's Global Port Tracker sees a slowdown in the supply chain in 2023 as retailers exercise caution.
Import volumes are expected to fall near levels not seen since the pandemic-induced economic slowdown of 2020 this winter, according to a new forecast.
February is forecast to be the slowest month for retail imports since May 2020, when factories in Asia shut down and stores closed to protect health and safety, according to the Global Port Tracker from the National Retail Federation and Hackett Associates. Only February and March 2020 saw lower numbers.
Now, retailers are importing less merchandise amid the slowing economy, elevated inflation and rising interest rates, said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold.
“February is traditionally a slow month, but these are the lowest numbers we’ve seen in almost three years,” said Gold, in a statement. “Retailers are being cautious as they wait to see how the economy responds to efforts to bring inflation under control.”
NRF/Hackett Associates Global Port Tracker. (Courtesy photo)
The forecast slowdown in February comes after December import volumes of 1.73 million Twenty-Foot Equivalent Units (TEUs) were down 2.6% from November and decreased 17.1% from December 2021. January numbers have yet to be reported, but are expected to fall 17.6% year-over-year.
The slowdown is expected to continue when compared to 2022, here are the forecasts for the next four months:
The pullback comes after 2022 saw record import volumes as supply chains unclogged. In turn, this left many retailers with an inventory glut as multiple seasons of merchandise arrived at the same time.
While a correction is evident, experts say this isn’t a return to normal. After two years of shocks, the supply chain is once again in uncharted waters.
“In some ways, 2023 is reminiscent of 2020, when the world’s economies shut down because of the pandemic and no one had a clue where we were headed,” Hackett Associates Founder Ben Hackett said. “Cargo volumes are down, and the economy is in a contradiction of rising employment and wages that promise prosperity at the same time high inflation and rising interest rates threaten a recession. The economy is far from shut down, but the degree of uncertainty is very similar.”